INCOME TAX ACT, 1961

Section 69

Income from undisclosed sources - Addition under section 69 - Alleged bogus purchases -

Information was received from the Director (Investigation) informing the AO that some accommodation entry operators in Mumbai were giving accommodation entries in lieu of commission through a maze of bogus purchase and sales in the name of companies managed by these operators to gems and jewellery merchants across the country. According to the assessee, it had filed copy of P&L account and details of purchase, which were duly supported by copies of bill to show the genuineness of the purchase. However, the AO did not accept the contention of the assessee. He noted that though the assessee had disclosed transaction with M/s. AVI Exports, the transaction was merely an accommodation entry provided by M/s. AVI Exports to the assessee and not genuine. Assessee replied that it had purchased diamonds genuinely from M/s. AVI Exports and the payment was made through banking channel and denied the allegations that M/s. AVI Exports was an accommodation entry provider/operator. However, the AO did not agree with the contention of the assessee. CIT(A) was pleased to confirm the order of the AO.Held: Following the order of the Tribunal in M/s. M.B Jewellers it was noted that similar issue had been addressed by this tribunal in respect of purchases made from M/s Vitrag jewels on the strength of statement/admission of Shri Rajendra jain in the case of Manoj Beganivs ACIT in ITA No. 932/Kol/2017 for assessment year 2008-09 ; ITA Nos. 933 to 935/Kol/2017 for assessment years 2010-11 to 2012-13 and ITA No. 936/Kolj2017 for assessment year 2014-15 : 2017 TaxPub(DT) 5573 (Kol-Trib) vide consolidated Order, dated 15-12-2017 wherein this Tribunal had elaborately discussed the modus operandi of all the transactions from various angles and decided the issue in favour of the assessee. The findings given thereunder was deleted not reiterated herein for the sake of brevity. In the light of the above said discussion, Tribunal was inclined to allow the appeal of the assessee and deletion of addition was deleted.

Followed:M.B Jewellers & Sons v. DCIT by Order, dated 24-5-2018 passed in ITA No. 104/Kol/2018 : 2018 TaxPub(DT) 2896 (Kol-Trib), Manoj Beganivs ACIT in ITA No. 932/Kol/2017 for assessment year 2008-09, ITA Nos. 933 to 935/Kol/2017 for assessment years 2010-11 to 2012-13 and ITA No. 936/Kolj2017 for assessment year 2014-15 : 2017 TaxPub(DT) 5573 (Kol-Trib) vide consolidated Order, dated 15-12-2017.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2015-16

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